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International observers kidnapped by militants in Ukraine

ELIZABETH JACKSON: In a dramatic escalation of the crisis in Ukraine, separatists in the east have kidnapped a group of international observers.

Overnight, Ukraine's prime minister accused Moscow of wanting to start World War Three, but Russia says Kiev is waging war on its own people.

Our Europe correspondent Mary Gearin reports.

MARY GEARIN: Just hours after Ukraine announced its forces would blockade the rebel-held city of Slavyansk and prevail over separatists there, the pro-Russian gunmen made their move.

They detained a group of international observers attached to the Organisation for Security and Cooperation in Europe, invited to Ukraine by the Kiev government; they're thought to have been unarmed.

The self-proclaimed mayor of the town, Vyacheslav Ponomaryov, told reporters the separatists had discovered a military spy in the group.

VYACHESLAV PONOMARYOV (translation): People who come here as observers from the European Union bring a real spy with them. It doesn't look good at all.

MARY GEARIN: At the United Nations in New York, Ukraine's deputy foreign minister Danylo Lubkivsky condemned the militants' actions.

DANYLO LUBKIVSKY: We demand the release [of] hostages. That development is unprecedented, and we call the Russian authorities to stop exporting terrorism into Ukraine.

MARY GEARIN: The apparent abduction is sure to lead to even greater concerns that Ukraine's east is spiralling out of the control of authorities in Kiev.

Even before the militants had made their move, Ukraine's prime minister Arseny Yatsenyuk accused Moscow of backing the separatists because it wants to occupy his country militarily and politically.

ARSENY YATSENYUK (translation): Russia is already keen on starting a Third World War. All responsibility for aggression on Ukrainian territory and for undermining international security rests with the Russian leadership.

MARY GEARIN: The war of words is certainly in full swing. Russia's foreign minister Sergei Lavrov said authorities in Kiev are waging war on their own people, and he says the aggressors lie in the West.

SERGEI LAVROV (translation): The West wants - and this is how it all began - to seize control of Ukraine because of their own political ambitions, and not for the interests of the Ukrainian people.

MARY GEARIN: There are few signs the recent Geneva accord is about to be implemented, and US secretary of state John Kerry didn't pull punches about who he thinks is to blame.

JOHN KERRY: For seven days, Russia has refused to take a single concrete step in the right direction.

MARY GEARIN: German chancellor Angela Merkel, along with other key European players, added her voice to the chorus condemning Russia's inaction.

ANGELA MERKEL (translation): Russia has the power - I am completely convinced of this - or could have the power to bring the separatists onto a peaceful path of discussions about the constitution and preparations for elections, but such signals are unfortunately lacking.

MARY GEARIN: Russia says it will honour the Geneva agreement, but accuses the US of distorting the terms of the deal to the public.

Washington is signalling sanctions are imminent. US treasury secretary Jack Lew has told reporters America is working with its allies so that the next round of sanctions against Moscow will put more pain on the Russian economy.

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